Hero image for the 7IM Short Thoughts video series

Buying a central bank?! — 7IM Short Thoughts

2 min watch

Ben Kumar, Head of Equity Strategy12 Jan 2024

You can invest in almost anything these days: property, wine, bitcoin, etc. But if you’re interested in a bit of monetary authority, you could also look at central banks. Surprisingly, some are listed as companies.

Watch the video below to find out how some of those have been performing and in which countries you can own them.

Transcript

We're all used to thinking of central banks as arms of the government. They set interest rates and monetary policy the same way that other bits of the government set rules, regulations, and laws. But interestingly, there are a few central banks around the world that actually function a bit more like companies. You can buy shares in them.

In Europe, for example, the Belgian National Bank and the Greek National Bank are listed. You can go and invest in them, which means you can look at the share price. And if you look at the share price on this chart, you can see that the Greek National Bank in blue is actually doing better than the Belgian National Bank over the last ten years.

Why is that? Well, it's because during the eurozone crisis in late 2010, the Greek National Bank bought a load of other Greek banks to keep them afloat. And it's been gradually selling them off and making a bit of money from it. In contrast, the Belgian National Bank didn't have to do any of that, just invested in government bonds.

But as interest rates have gone up, those government bonds have been worth less and less. So people are preferring to invest in the Greek National Bank, rather than the Belgian. I'm not suggesting you should invest in any national bank, but if you are interested in owning a bit of a monetary authority, you can also look at Japan, Turkey, Switzerland or South Africa.